FAQs

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C-PACE is growing exponentially, filling a strong need in the commercial sector to control utility costs without having to allocate cash or take on balance sheet debt. A wide range of property owners and businesses are using C-PACE in states where it is available.

C-PACE is particularly well suited for triple net leases because their provisions allow for the pass through of financing payment. With C-PACE financed improvement, the property owner can reduce the operating expenses of tenant space and common areas. If the improvements benefit the tenants, then the proportional share of the C-PACE financing payments can be passed through to the tenant.

Similar to an operating lease, C-PACE financing payments can be treated as an annual expense instead of long-term debt. This is a result of C-PACE financing being secured by a property tax lien and assessed annually alongside property tax bills. Since C-PACE is a property tax assessment, many owners treat it as an operating expense alongside which only the current year’s tax assessment appears as a current liability on the balance sheet. With this accounting, C-PACE is not added to the balance sheet as long-term debt.

C-PACE stays with the property, not the owner. In the event of a property sale, the C-PACE assessment automatically transfers to the new property owner, who may still benefit from implementing efficiency upgrades.

C-PACE payments are non-accelerating; the property owner only ever owes the current year’s payment with no balloon payment. This is part of the basis for not recording it as debt; it is consistent with other property tax assessments.

GAAP standards do not address C-PACE specifically, but there is now substantial precedence for off balance sheet treatment. Furthermore, property owners can choose whether to treat C-PACE off balance sheet or on balance sheet.

Please note: Lever Energy Capital is not a financial advisor, and any accounting related explanations we provide should be confirmed with a qualified professional.

What constitutes better terms will depend on the needs of each company and the projects under consideration, but C-PACE financing typically offers better terms than any traditional bank financing, due to the following unique benefits:

100% financing

Fixed rates up to 20 years without collateral

Non-recourse

Off balance sheet treatment

Non-acceleration in the case of default

Automatic transfer upon sale

Treatment as equity as part of new construction

Because payments for C-PACE are property assessment payments, they can be expensed entirely. On traditional debt, only interest portion of a debt payment can be expensed. This results in a significant tax benefit.

C-PACE is not an incentive and C-PACE programs are not funded through tax dollars. C-PACE is simply a means for a municipality to assist a property owner to make smart improvements to properties in ways that have indirect benefits to the community as a whole. Because C-PACE is pro-business and costs the taxpayers nothing, there are no significant political opponents to C-PACE and it is likely to exist for a long time.

No. C-PACE is attached to the property and transfers automatically to a new owner upon sale. The new owner will enjoy the same savings and tax benefits, as well as the marketability of the progressive building profile. If a new owner does not wish to take on C-PACE financing, then pre-payment of payments is available for a flat percentage fee.

In most instances, a local municipality opts-in to its state C-PACE program after the state legislature passes program guidelines. A private program administrator facilitates final C-PACE approvals for the municipality, files the property tax lien, and set-ups payment servicing.

Municipalities generally embrace C-PACE since it is a simple way encourage business owners to invest in their properties, while stimulating economic development and creating a more sustainable building stock.